Context: I was watching a video about Venezuela, and, it all started with capital flight due to poor confidence in the government. The government tried to stop it, and in the process it created a bubble in the exchange market, causing smuggling and exportation into neighboring countries highly profitable in order to buy the dollar outside Venezuela and to sell at high prices in the bubble inside Venezuela. I can see how that causes inflation (same money supply chasing less domestic goods).
But then, the video said: if the foreign exchange market is open in order to end the bubble once and for all, allowing the currency to depreciate to its normal levels, thus allowing capital flight to happen in the first place, it would trigger more and more inflation (in hyper levels). And that's when I bugged me. I started searching in other sources, for instance this one, and several of them said that capital flight can indeed trigger inflation. But why?
Let's focus on capital flight: It is my understanding, that capital flight shifts the supply curve of a given currency in the exchange market, causing its depreciation with respect to, say, the dollar. But then.....:
(1) Shouldn't it cause a deflation? Currency is less and less available (due to flight) for the purchase of domestic goods, thus.. deflation. That is, a smaller amount of currency chasing the same goods.
(2) But also, capital flight is done with saved money, instead of money reserved for purchases, and that means aggregate demand is not affected much, meaning, purchases are done as normal, and normal life follows. Surely, that doesn't mean a deflation, but it doesn't mean an inflation either.
(3) Consider this: Assume for whatever reason, interest rates has fallen. This means, borrowing money is cheaper, and that is likely to cause a shift in aggregate demand and domestic consumption, possibly boosting the economy, and causing some inflation in the process. However, with capital flight, there's less and less investment done inside the nation, so, the supply of investment shifts, causing an increase of interest rates -- which again, should tend to cause a deflation due to a decrease in the money supply (basically, the reverse reasoning of lower interest rates).
My question: Why does capital flight can trigger inflation? What is wrong with my reasoning in these three situations?
I am not an economist.. so... forgive me if this is such a simple question.